Cuba’s Roller-Coaster Investment Climate — Not for the Faint-Hearted

(AP Photo/Franklin Reyes)

The Cuban government has taken increasingly large steps in recent years toward economic liberalization. In this photo taken April 23, 2010, golfers use a practice area during the Montecristo Cup Golf Tournament in Varadero, Cuba. Cuba issued a pair of surprising free-market decrees on Thursday Aug. 27, 2010, allowing foreign investors to lease government land for up to 99 years, potentially touching off a golf-course building boom, and loosening state controls on commerce to let islanders grow and sell their own fruit and vegetables. (AP Photo/Franklin Reyes)

Journal of Political Risk, Vol. 3, No. 4, April 2015.

By Vito Echevarria 

Attendees of the “Cuba Opportunity Summit” – held on April 1, 2015 by the Wharton School of the University of Pennsylvania at the NASDAQ Marketsite in New York City – consisted mainly of American companies and entrepreneurs, who are caught up with the gold rush-like fervor over the prospect of finally doing business with Cuba. That island, which has endured a harsh trade embargo imposed by Washington since its takeover by Fidel Castro and his Communist revolution, is perhaps the ultimate frontier market on the planet, since American companies have been forbidden from conducting any trade with that regime for decades.  The one glaring exception has been the opening of food trade, which Bill Clinton allowed before leaving office in 2000. Cuba has since become a multi-million-dollar market for various U.S. agricultural and food products.

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The New Face of Russia’s Relations with Brazil

Defense Minister of Brazil, Celso Amorim, receives his counterpart from Russia, Sergei Shoigu, during bilateral meeting in Brasilia.

Defense Minister of Brazil, Celso Amorim (L), receives his counterpart from Russia, Sergei Shoigu, to bilateral meeting at the Defense Ministry in Brasilia, capital of Brazil, on October 16, 2013. Shoigu’s visit included an attempt to win a $4 billion deal to supply 18 fighter jets.

Journal of Political Risk, Vol. 2, No. 5, May 2014.

By Matthew Michaelides

Abstract

Bilateral trade, high level personal communication, and military-technical relations between Russia and Brazil have all grown significantly over the past decade. Recent weapons sales to Brazil include a $150 million contract for MI-35 helicopters in 2009 and a 2012 deal for seven Ka-62 helicopters. Moreover, the Russian defense ministry has indicated its intention to increase Russian military capacity in Brazil and Latin America more broadly. This paper examines the causes for the increasing depth of Russian-Brazilian military-technical relations and concludes that informal patronage politics play an essential role in understanding Russian actions. A detailed analysis of contemporary Russian-Brazilian relations and existing theoretical perspectives is provided, as well as a thorough examination of recent Russian arms and equipment sales from the informal patronage politics perspective.

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Watch for increased socialism in Latin America

Despite the political change that just swept Venezuela — which may indicate a decrease in the promotion of socialism from that country — a more powerful influence for Latin American socialism just arose in Rome. Today Cardinal Jorge Mario Bergoglio became Pope Francis, a name he chose after a Saint known for his asceticism. While socially conservative (e.g., on abortion and gay rights), Cardinal Bergoglio was known to eschew the luxuries of his station for a simple life that included modest quarters, self-cooked meals, and hailing the bus in Buenos Aires. His sermons suggest great sympathy for social justice and the poor, and he comes from Latin America  (Washington Post).

Bergoglia’s reputed historical links to 1970s fascism in Argentina, and his political astuteness, means that he wants to prove otherwise. Regardless of his true feelings, it will be hard for him not to play to his massive constituency of poor Catholics in Latin America — the greatest number of Catholics worldwide. Nearly all of Latin America’s poor will be looking to him to address their plight. Regardless of the position he takes on poverty in the future, the lay Catholic ministry in Latin America, and political entrepreneurs farther up the hierarchy, will gain favor among their largely overlapping constituencies for presenting the new Pope as supportive of socialist endeavors. This points to a revival of the liberation theology of the 1980s, and a greater probability of socialist-inspired coups, revolutions, debt defaults, and nationalizations — especially in Latin America.

Death of Hugo Chavez

With the death of President Hugo Chavez of Venezuela today, expect increased political stability in Latin America. President Chavez was an activist in international politics, encouraging ideological conflict of the anti-Western and anti-market variety. He used his country’s oil wealth to magnify his voice and achieve these ends. Investments in Venezuela and Latin America will be safer without Chavez.

Concerns that his likely successor, Mr. Maduro, will be more radical (Wall Street Journal) are almost certainly overblown. Mr. Maduro’s comments on foreign influence in the country, and his expulsion of two US diplomats, are likely meant to solidify political support among Chavez supporters. This is a short-term political strategy on the part of Mr. Maduro, without long-term effect on the Venezuelan investment environment.